Friday, August 08, 2014

John Williams from ShadowStats.com says the Fed's quantitative easing has failed because the bank balance sheets remain toxic, so lenders are not lending, stifling the intended economic growth. The trillions of dollars added to the Fed's balance sheet since 2008 simply kicked the recessionary can a few years down the road but the net result will be a new domestic depression. In order to stave off the angry hoi poli (we the people) Fed officials will coordinate with their global colleagues and Capital Hill to orchestrate a massive banking system recovery program, Bailout 2.0. If officials would implement tariff's to defend the domestic industrial base / high paying jobs and improve ailing exports, the economic engine could be revived. However, few political leaders appear to have the wherewithal to stave off the blowback required by such legislation. Disruptions in the flow of products to grocery stores and rapidly rising prices requires planning today, including the addition of gold, silver and survival goods to ride out the impending economic earthquake. Bill Murphy from GATA.org says that few media outlets are interested in the price suppression story, despite mountains of supporting evidence. Gold stock manipulation may include naked short selling, a nefarious practice only available to the elite, which artificially dilutes share price, crushing the wheat and with the chaff. But the machination will eventually backfire, as it requires up to 5 years to get a mine back into production and online, creating a gold supply void and subsequent price explosion. As the adage goes: it's difficult to convince someone otherwise, when their livelihood depends on faulty thinking, in similar fashion, investors are being lured away from precious metals at their peril and into bubble markets that will fleece the herd. Bill Murphy cites friend of the show, Eric Sprott who expects silver to run back to $50 and then on to new heights, perhaps even the triple digit mark. As for gold, Bill Murphy's technical work suggests that if price climbs above $1,326, then $1,400 is the next level to watch closely.

Monday, August 04, 2014

The head of Euro Pacific Capital says Wall Street is perplexed by the near 10% gold rebound in 2014. The nascent domestic housing / economic recovery may be only smoke and mirrors; bad news for Fed officials who are basing their forecasts on continued demand for residential real estate. The HGX housing index dropped to the lowest point in over seven months this week, after registering no forward progress in over a year. As home builders curtail new projects, ripple effects will be seen across the land, impacting arguably the most significant component of economic output and sniffling consumer spending and by proxy corporate profits. The nation has changed so significantly in recent decades that everyone must start making contingency plans for higher prices and fewer wage earning opportunities. Peter Schiff's work suggests that the resulting sluggish business conditions will force the Fed's hand, pushing their balance sheet to record levels and holding interest rates too low for too long. The end result will be renewed interest in inflation hedges, but this time, massive retirement / pension fund capital flows could catapult the precious metals sector to levels beyond the dreams of avarice. Gold stocks offer the best valuations, the XAU is likely to lead the charge out of the summer doldrums as investors have underestimated gold's prospects. He's putting his funds / reputation where his words emerge via the Euro Pacific Gold Fund (EPGFX). The key takeaway point: the economic implosion is unavoidable, the time is now to take steps to preserve wealth / savings / capital.

Professional real estate managerFabian Calvo says the top real estate hedge funds have access to virtually free loans, facilitating the purchase of millions of foreclosures at fire sale levels, pricing out the typical home buyers, most of whom have neither the credit nor down payment necessary to benefit from lower prices. Our officials are sending the sheep to slaughter, demanding the return and proliferation of subprime loans, easy credit to lure the unsuspecting flock into a Housing Bubble 2.0, requiring yet another bailout of epic proportions, potentially crushing the greenback and sending the precious metals into the ionosphere. Troubling economic times and perhaps even a new cold war require investing portfolio contingency plans - that's why Fabian continues to add gold to his stockpile each month.

Boston University economics professor and author of the new bestsellerThe Clash of Generations, Dr. Kotlikoff says that every investor must own precious metals, given his finding that the official $17.6 trillion dollar national debt figure is laughable, merely a rounding error of the true figure. In fact, the actual national debt is nearly 13 times bigger, $225 trillion when unfunded liabilities are included. A few brave members of Congress have addressed the domestic Ponzi scheme (like Dr. Ron Paul) but subsequently watched their financial support evaporate making reelection prospects challenging. America is facing an employment crisis as well; underemployment remains a key stumbling block to prosperity and the American Dream. Dr. Kotlikoff insists that our officials can solve the dilemma by getting the fiscal house in order and by fixing the education system via reduction of class sizes to facilitate teaching through individualized learning. Due to malfeasance within the SIPC insurance program, no brokerage account is safe. Dr. Kotlikoff won't open a brokerage account because any funds withdrawn over the past six years are now liable to confiscation, putting every American investor at risk. Put simply, due in no small part to the Madoff scandal, any funds an investor unwittingly spends from a personal brokerage account is exposed to SIPC law suits for the next six years. Other than precious metals, the professor shares several ideal alternatives to domestic securities, for avoiding the duel threats of fiscal irresponsibility and confiscation.

The Chief Investment Strategist at Sprott Asset Management for over a decade, John Embry sees important signs that the precious metals market has bottomed, including the accelerating gold shortage, which will ultimately culminate with a disconnect between the paper and physical markets. The rumors are true, there's little to no available bullion available in sovereign vaults (unencumbered, not leased / swapped), the gold has been rehypothecated, as evidenced by the inability for the Bundesbank to repatriate even a tiny fraction of their reserves from Fort Knox. Canada's banking system is the envy of much of the Western world, nevertheless he draws the starling inference that the recent legislation putting savers at risk for financial shortfalls suggests that officials are bracing for a Noah's flood sized financial deluge. The preponderance of evidence / data suggest that the greatest risk facing North America is a currency crisis, where the US dollar suddenly loses it's reserve status and plunges below long-term support, further eroding purchasing power just when household budgets are already stretched beyond the breaking point, held together by credit card liquidity. He throws listeners a life preserver in the form of two of his favorite precious metals stock ticker symbols, including Lake Shore Gold: LSG (Disclosure: goldseek.com employees may own shares) with phenomenal prospects. But the exciting news is for silver investors - bears have shorted an entire year of silver mining output, a fact that could propel the price far beyond the 2011 peak of $50 and into the stratosphere, perhaps as high as the inflation adjusted price of $150 as billions of investors cogitate the ramifications of the imminent global currency reset. So how much gold / silver / shares is enough for the typical investor? Portfolios require a precious metals allocation of at least 20-25%.